News & Analysis

FTSE 100 back on track after best day in 5 months, but with added volatility!

Andrew Saks, Thursday, 22 July 2021

The FTSE 100 index never fails to astonish, its stellar performance over the past few months being testimony to the ever-increasing gulf between the continued strengthening of gargantuan blue-chip companies and the plight of the small to medium sized enterprises.

Britain is no place for entrepreneurs these days, and the FTSE 100's continued acceleration is a black and white demonstration of the three-sector structure of today's commercial environment, that being big government, big corporations and struggling or diminishing small business.

Yesterday, the FTSE 100, which is the prestigious group of 100 top listed stocks on the London Stock Exchange, did not just creep back to stability. Instead, it raced back across the 7,000 points mark, and has gained a remarkable 10 points at the London market opening this morning compared to the same time yesterday.

That is a remarkable move indeed. During the course of yesterday, The FTSE 100 added 117 points, which equates to 1.7%, during Tuesday's trading, partly as a result of recovering airlines and engineering stocks, before gradually increasing during Wednesday.

One of the outspoken leaders in yesterday's business day was easyJet CEO Johan Lundgren, a vocal critic and opponent of travel restrictions, and as a result of his refreshing statement, easyJet's shares rose.

The large companies in the FTSE 100 are concentrated across many sectors, and many of the firms that have contributed toward titan strength over the past few months during the largest recession in 300 years are engaged in government contracts. Those companies include large business process outsourcing companies such as Serco, and big pharmaceuticals which have been growing their revenue bases tremendously as national governments around the world buy their products.

Another area that has been unaffected by government closures is the construction and engineering sector, and there are plenty of large companies listed on the London Stock Exchange which have been involved in infrastructure projects that have kept going uninterrupted for the past 18 months.

Despite the euphoria, there is still a degree of volatility this morning, and although the FTSE 100 raced up to 7002 at 8.00am on the market open, it suddenly went down again and by 8.30am it was at 6,989, once again back down below the 7,000 mark, and is now rebounding suddenly.

During yesterday afternoon, one of the shining stars was mining giant BHP PLC which climbed 2.33% to 2239p on reports it has put its oil and gas assets up for sale for between $10 billion and $15 billion.

Another interesting point about BHP is that self-styled eccentric influencer Elon Musk, himself able to move the markets, has agreed to buy nickel from BHP to make batteries for Tesla cars.

Whilst Tesla cars are not the sole reason for the interest in any stock or asset class that Elon Musk turns his very short attention this millisecond, they do represent a yardstick in the renewable energy and sustainable 'green' agenda that is now part of every industry worldwide, therefore when Tesla takes a certain direction, or Elon Musk goes into social media overdrive, entire markets move.

All in all, an interesting day of volatility has begun on London's most prestigious index, which is something that analysts and traders generally focus on especially after a long time of high values and small movements.

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